Pertamina to focus on its core business

JAKARTA (JP): The state-owned oil and gas company Pertamina stated it would no longer inject equity funds into its subsidiaries so that it could focus on its core business.

"We have stopped injecting capital into them (the company's subsidiaries). We have decided not to develop them any longer so that they can develop themselves," Pertamina director for general affairs Baharuddin said in a hearing with the House of Representatives Commission V for manpower and trade.

Baharuddin said Pertamina planned to "abandon" its subsidiaries not involved in Pertamina's core business.

He did not specify if Pertamina would liquidate or sell the companies in the future.

"We want to concentrate on our core business," he said.

Pertamina's subsidiaries which are not involved in the oil and gas business include PT Elnusa, active in telecommunications- related services; PT Pertamina Tongkang, involved in sea transportation services; PT Patra Dok Dumai, which operates the Dumai dockyard in Riau; air carrier PT Pelita Air Service; PT Patra Jasa, active in the hotel industry; and PT Patra Tani, involved in the agricultural industry.

Pertamina had liquidated its nonperforming subsidiary Patra Tani due to its years of loss. But he said Pertamina would still financially assist two other companies in the red -- Pelita Air Service and Patra Dok Dumai.

Pelita is expected to suffer a loss of Rp 15 billion (US$3.8 million) this year, while Dok Dumai's loss is estimated to reach Rp 2 billion.

Pertamina would lend both companies Rp 20 billion to pay their debts.

Baharuddin expected both companies would be able to earn profits or at least self finance their operations next year. He did not specify Pertamina's plan if both companies still suffered losses.

Pertamina's subsidiaries which are expected to book profits this year include El Nusa with an estimated after-tax profit of Rp 23.6 billion, Patrajasa with a Rp 6.9 billion profit and Pertamina Tongkang with a Rp 8.9 billion profit.

Baharuddin also said Pertamina had stopped injecting funds into its hospitals across the country over the past three years and planned to set up a company called PT Rumah Sakit Pertamina to manage all the hospitals.

Pertamina finance director Soegianto told the commission the company's consolidated assets reached Rp 33.2 trillion in the 1996/1997 fiscal year ending on March 31.

He said Pertamina's total debts reached Rp 15.3 trillion in the same period, comprising of Rp 6.6 trillion in short-term debts and Rp 8.7 trillion in long-term debts.

He said the rupiah's sharp depreciation against the U.S. dollar did not affect the company's ability to service its debt in dollars because the company made debt payments with its export revenues. (jsk)